Country A, Country B, and Country C were member states of the World Trade Organisation (WTO).
(a) Country A was a major exporter of rice
(b) Country B was a major exporter of vegetables
(c) Country C, being a non-food producing country, was a major importer of rice and vegetables from Country A and Country B, respectively, for many years The recent COVID-19 pandemic has, however, caused Country C to discover weaknesses in its food import program for relying 100 per cent on its immediate neighbours for food security.
Therefore, Country C decided to diversify its sourcing and produce food domestically when possible. For instance:
(a) Country C, notwithstanding the longer distance, decided to import rice from another three WTO member countries.
(b) Country C also decided to grow its own vegetables, aiming to produce 50 percent of the country’s demand in 15 years.
To support the policies, Country C launched two measures: First, a 5% import tariff relief for rice imported from the three faraway countries (to offset the higher logistics costs).
Second, a 15% sales tax on all imported vegetables to help local vegetable start-up farms be more price competitive in the domestic market.
Two years into the program, Country A and Country B suffered a significant decline in exports as Country C was importing less from them. The two countries intend to request a consultation with Country C under the WTO’s dispute settlement body.
(a) Explain the Most Favored Nation (MFN) principle in the context of the General Agreement on Tariffs and Trade (GATT).
(b) Illustrate whether Country A and Country B can claim against Country C for breach of the MFN principle. You should support your answer with appropriate WTO dispute cases and explain why these cases are applicable.
With reference to the scenario in Question 1,
(a) Assuming Country C’s import tariff relief to the three other countries was a result of preferential trade agreement (PTA) or generalized system of preference (GSP). Does this new information alter your response on whether Country C has violated MFN principle? Support your answer with a GATT Article or demonstrate your answer with a dispute settlement (DS) case.
(b) Assuming that Country C is Singapore, the three other faraway countries are China, Peru, and United States. List all the preferential trade agreements that Singapore has with these countries.
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